Tesco to check in with 'cash & carry'

NEW DELHI: Undaunted by Wal-Mart walking away with its wannabe partner Bharti, UK retail behemoth Tesco is believed to have firmed up plans to take its first step into the Indian market. The company is reportedly entering the cash-and-carry business in India, where, currently, 100% FDI is allowed.

However, according to sources, Tesco has not closed down options for a full-fledged retail presence in India either. "Tesco will enter India through the cash-and-carry route before the middle of next year. The idea is to have a better understanding of the market. The company will then clinch a franchise deal with a domestic retail chain for its front-end venture," a source told ET.

While winding up its talks with Bharti, Tesco had said it was excited by the opportunities available in India and that it would continue to explore the best options to enter the market. Following the breakdown of talks with Bharti, Tesco is learnt to have approached a leading Mumbai-based business group. However, the group was not interested in an alliance.

India could be Tesco's first greenfield cash-and-carry venture. A couple of days back, Tesco marked its entry into the cash-and-carry segment with the acquisition of Malaysian chain Makro Cash & Carry. "Tesco might use its learnings from Makro in India," the source pointed out.

Currently, the two most prominent players in the Indian cash-and-carry business include the German chain Metro and the African food retail chain Shoprite.

With FDI not being allowed in retail, cash-and-carry is seen as an interesting business proposition for international retailers. According to Euromonitor, a London-based market intelligence firm, "When the restrictions on the retail industry in India are lifted, international retailers will be in a prime position to easily convert their cash-and-carry stores into highly profitable supermarkets and hypermarkets."